Samantha Dolan operates a small consulting business as a sole proprietor. During 2018, she has...
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Accounting
Samantha Dolan operates a small consulting business as a sole proprietor. During 2018, she has the following transactions related to the business:
Customer sales on account
$75,000
Collections from 2018 Credit Sales
$5,000
Collections from 2018 Credit Sales
$18,000
Business Bad debts
$8,000
Operating expenses incurred during 2018
$44,000
Operating expenses from 2018 paid in 2018
$33,000
Operating expenses from 2018 paid in 2018
$10,000
Calculate the net income or loss from Samanthas business using the accrual method of accounting
Calculate the net income or loss from Samanthas business using the cash method of accounting.
What accounts for the difference in the two net incomes and how does this benefit or cause a problem for a trade or business?
Note from instructor: I would just use both as displayed. I think theyre just trying to make you take into account multiple line items like you will in real life (but they would probably be named differently).
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